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Lord Lipsey: My Lords, I support my noble friend and the tenor of the debate. It is quite curious that when the BBC had a problem with its independent suppliers about Endemol which caused it to miss its quota the Government rushed forward with an order to correct the position. ITV never seems to receive quite the same solicitousness from Ministers.
However, on the other point raised by my noble friend, one of the characteristics of the ITV regional companies is that they are companies making programmes outside the M25. With great respect, much of the "indie-industry" is also outside the M25. I hope that there is to be some parity of treatment between the attention given to the BBC's problems and that given to ITV and that the amendments will be regarded with sympathy.
The amendments seem to be intended to ensure that producers with an ownership link to UK broadcasters can be considered independent subject to an economic dependency test. The ITC considered this very issue in its UK programme supply review, which examined the overall economic health of the TV programme supply market in the UK, and in particular the role of independent producers within it.
The situation, however, will be kept under review. Ofcom will be required to review the operation of the quota, including the various definitions, on an annual basis and report to the Secretary of State. Any further changes to the definitions can be made by secondary legislation, though the amendments we are now consideringthis must be a signal and crippling disadvantage to themwould effectively take that flexibility away by defining the term "independent producer" on the face of the legislation.
What would be the point of Ofcom's review if there were no means of giving effect to its recommendations? Therefore, that argues very much in favour of our current approach of defining in secondary legislation the terms "independent productions" and "qualifying programmes". It gives us that flexibility. We cannot know whether the definitions in place today will remain appropriate in 10, five or even two years' time. We need the flexibility of the order-making power to ensure that these definitions are right. To define in primary legislation the term "independent producer" would greatly restrict this flexibility.
I have heard what my noble friends have said in their eloquent pleas about the issues with regard to particular groups of independent producers. My noble friend the Minister is prepared to talk to them further to see whether we can make progress on what they have identified as a real issue. However, I am indicating this evening that we do not consider that the solution lies in changing the primary legislation.
Lord McNally: My Lords, does the Minister agree that the initiative, which was very welcome at the time, that emerged from the pre-legislative Select Committee was for the ITC to make a study? From that study came some very useful advances for the independent sector. Would it not be far better if the kind of proposals put forward by the noble Lords, Lord Crickhowell and Lord Bragg, for the smaller ITV companies could be dealt with in a similar pragmatic way once Ofcom was up and running? I did not indicate this earlier, but if the noble Lord is looking for support in that approach, he will have it from these Benches.
Lord Davies of Oldham: My Lords, uncharacteristically, the noble Lord, Lord McNally, is late to the party, but his contribution is very welcome. I see considerable merit in what he indicates. The noble Lord is, in his usual benign way, giving necessary
I am rather disappointed by the Minister's response. One of the reasons for tabling these amendments was to follow up the order to which the noble Lord, Lord Lipsey, referred, with which we were not happy. It seemed to be prejudiced against some of the smaller companies and to be a reaction to a particular situationEndemol. We felt that was rather unfair. So we are reluctant to trust that the order route is satisfactory.
That said, if the Minister is suggesting to me that our amendments would remove future flexibility by defining the term "independent production", I am concerned I notice my noble friend Lord Crickhowell nodding at that remark. I defer to my noble friend on that issue. It is disappointing. We worked hard to try to table an amendment that would alleviate the clear concern in Committee that such tests as we were keen to apply could allow the quota to be attacked by the back door.
That said, I am pleased that the Minister has offered further discussion about the smaller regional TV companies, for example. The suggestion made by the noble Lord, Lord McNally, is a good one. Therefore, for now, I beg leave to withdraw the amendment.
The noble Baroness said: My Lords, I shall speak to Amendments No. 142 and 143 in Clause 276, to Amendments Nos. 144 and 145 in Clause 277, to Amendment No. 146, after Clause 277, and to Amendment No. 244 in my name and that of the noble Lords, Lord McNally and Lord Gordon of Strathblane, and the noble Baroness, Lady Howe of Idlicote. I thank those noble Lords for adding their names to those important amendments.
Taken together, the effect of Amendments Nos. 142, 143, 145 and 146 would be to delete the requirement for Channel 3 to appoint a new supplier from among a list of companies that have secured nominated status from the regulator. De facto, that would also do away with current ownership restrictions placed on the so-called nominated news provider. However, it would retain the obligation on Channel 3 to supply a news service competitive with other national news services. It would also retain the new powers proposed by the Government that give Ofcom power to issue guidance
Those are powerful provisions that will ensure that Channel 3 has a news supplier that is adequately resourced to discharge the obligations with regard to news on Channel 3 included in the Bill. Amendment 204 is a consequential amendment that deletes Clause 343, which would raise the current 20 per cent ownership limit to 40 per cent. Taken together, those amendments, which were also presented in Committee, would remove the proposed ITN ownership restrictions while retaining clear obligations on ITV to properly fund a news service that is capable of competing with that of Sky News and the BBC.
The issues in this debate have been well rehearsed both in another place and in Committee in this House. Whatever initial opposition there was at the start of the process has gradually evaporated to the point where, in Committee, the Minister faced the unenviable task of being the only Member of your Lordships' House out of 10 who spoke on the issue to defend the status quo.
The power and persuasion of the arguments deployed across the Chamber during our debate in Committee exposed the fact that the Government have no clear or logical reason for retaining ownership restrictions on ITN. Each argument that has been advanced by the Government has been comprehensively dismissed.
First, Ministers argued that the retention of the current rules is necessary to protect the editorial quality of news on ITV. But, as acknowledged by the Government elsewhere in the Bill, editorial quality is more appropriately safeguarded by content regulation than by ownership. The quality and impartiality of news on television is indeed a matter of great importance. That is why we, along with ITV and ITN, are happy to support those aspects of Clause 276 that strengthen the obligations on Channel 3 to provide a high quality news service and give Ofcom greater powers with regard to the terms agreed.
Secondly, it has been argued that it is important to keep the rules on ITN ownership because we do not know who might own ITV following the Government's relaxation of the media ownership rules, the implication being that ITN might fall into the hands of foreigners. This is perverse nonsense from a Government who are relaxing the rules to allow non-EEA owners of ITV. In addition, the current rules do not afford ITN any such protection. In the last bidding round for the ITV contract, the ITC approved a bid from a largely foreign-led consortium consisting of Sky, Bloomberg and CBS. ITV chose to stick with ITN, but there is nothing in the current Bill to prevent ITV awarding the contract to a company other than ITN next time around.
Finally the Government have argued that increasing the share that any individual company may hold in ITN from 20 per cent to 40 per cent will help to boost investment in the company by allowing it to move from a minimum of five to three shareholders. But if this relaxation is of such benefit, why is it that ITN has been the most vociferous opponent of the rules as currently framed in the Bill? Have the Government not begun to ask themselves why, if these rules are so good for ITN, it is ITN that has led the charge against them?
It is because they will have the opposite effect. They will condemn ITN to a fragmented shareholding structure and make it more difficult for its management team to secure investment, grow the business and keep the ITN brand strong. In Committee the Government indicated that Ofcom would be able to lift the ownership rules and that they did not object to Ofcom looking at this as an early priority. But the reality is that, on taking office, Ofcom will immediately have to deal with the obligatory review of the whole of public service broadcasting to inform the BBC's charter review process, the replacement of every Channel 3 analogue licence and the Channel 5 analogue licence with new digital licences, the establishment of a new co-regulatory body to regulate broadcast advertising, the setting of origination targets and quotas and the introduction of new programme codes, to name only a few of its tasks.
The reality is that if we leave this to Ofcom, it will slip to the middle or bottom of a very long list of priorities. That will leave ITN labouring under ownership restrictions not faced by any of its competitors, unable to secure the investment it badly needs now if it is to sustain its position as a market leader in news supply. There is clear support across the House and across the broadcasting industry for the removal of these rules. Their removal will help to strengthen ITN and the news supply market in the United Kingdom.
In Committee the Minister promised to bring forward amendments on Report that might meet us half way. These have not materialised and I take that as a positive sign that Ministers are prepared to meet us not just half way, but at the final destination. I hope that the Minister will be able to give us a clear assurance on this point so that we are not compelled to divide the House on an issue on which there is such wide agreement. I beg to move.
Lord McIntosh of Haringey: My Lords, I wonder if I might intervene now because I have something positive to say, which may be helpful. I do not wish to curtail debate and I shall be glad to respond to any further points that are made, but what I have to say now may be helpful to noble Lords.
We have listened carefully to all the arguments and we have been persuaded that we should modify the arrangements for an appointed news provider for Channel 3. We shall bring forward amendments at Third Reading to do so. Let me outline what we propose.
We will remove the ownership restrictions on the appointed news provider, thus removing the legal obstacles preventing ITV or anyone else from taking a majority shareholding in the appointed news provider or owning it outright. For clarity, I should add that we shall retain the restriction on bodies disqualified from holding broadcasting licences by virtue of Part II of Schedule 2 to the Broadcasting Act 1990, such as political parties, from having an interest in the appointed news provider. I would add in passing, since I must have some retaliation for the powerful speech just made by the noble Baroness, Lady Buscombe, that the amendments as tabled would have removed that restriction, which I am sure was not their intention.
We shall also introduce a new restriction. As the House is well aware, there are restrictions preventing newspaper owners with 20 per cent or more of the national newspaper market, or bodies controlled by such owners, from holding an ITV licence. However, there are no specific restrictions on such bodies from having an interest in the appointed news provider. Although, like everyone else, they are prevented from having more than a 20 per cent interest in the news provider, once we remove the ownership restrictions they could own the appointed news provider outright. It would be odd, to say the least, for such a body to be prevented from holding a Channel 3 licence and yet be able to provide it with its newsits most politically and democratically sensitive material. We will therefore amend the Bill so that a person who cannot hold a Channel 3 licence cannot have more than a 20 per cent share in the Channel 3 news provider.
This leaves these bodies in exactly the same position as they are under the current legislation. So they will not be prejudiced, but they will not benefit either from the ownership relaxation we are providing. We will retain all the other important quality aspects of the appointed news provider regime currently set out in the Bill which require Channel 3 to provide a news programme capable of competing effectively nationally and which is adequately funded.
We will also amend the Bill to ensure that Ofcom can obtain all the information it needs from ITV or the appointed news provider to assure itself that the necessary funding arrangements are in place and working properly. As a safeguard, we will retain a power in Clause 276 to reintroduce further ownership restrictions on an appointed news provider in the future. This could be done, for example, as the result of a recommendation from the reviews that Ofcom is required to conduct when Channel 3 or Channel 5 licences change hands, or when Ofcom carries out a review of the media ownership rules under Clause 384. We think this is a useful safeguard.
Clearly, any decision to reintroduce limits in the future would have to be reasonable and proportionate and comply in particular with our European Convention on Human Rights obligations. I hope that that is helpful to the debate.
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